Human Resources Employment
Employment is clearly an economic affair.
Except for the occasional professional athlete who claims she would pay to play the game, or the starving artist driven by his muse to create without tangible reward, people work in substantial measure for the economic rewards they earn.
Even more so, most employers hire their employees primarily for economic reasons.
This is not to say that wages (or other economic benefits) are the be-all-and-end-all of employment from either the employee's or employer's perspective; personal and social fulfillment play important parts.
But it would be hard to deny that economic factors play a huge part.
The economic view of employment that we will adopt involves a sequence of ideas and observations.
We will provide an outline of the basic framework in this section.
When this is done-when the "big picture" is all laid out-we will elaborate and analyze the individual steps in the sequence.
(1) Employment is often an open-ended transaction, with the details of the transaction specified only as time passes and relevant contingencies arise.
This assertion probably doesn't come as a surprise to you.
The idea is simply that when the employees takes a job, the duties entailed a month or six months or three years ahead are not precisely specified.
Moreover, details about salary a year or two or five years hence, future promotion prospects, and the like are left vague.
This isn't to say that these so-called "terms of trade" aren't vaguely anticipated.
Each side has at least a rough idea about what will be involved.
But the details-some of which are quite important to the value of the transaction to two sides-ares left to be determined later.
Why? The simple answer is that many employment relations are enduring, or at least hold the possibility that they will be enduring, and the parties involved either can't anticipate all the possible future contingencies or don't want to waste time and energy at the outset detailing how each contingency, however unlikely, will be met.
The aphorism we'll cross that bridge when we come to it captures what is going on, where some of the bridges to be crossed aren't even foreseen at the outset.
In recent years, firms have increasingly opted for temporary workers, workers hired on a single-project basis, and the like.
To the extent that this is true, employment relations are increasingly less open-ended.
But note well: If someone hired by a firm to work on a project has reasonable prospects of being hired on future projects, then the overall "employment relationship" between the two is open-ended, in the sense that the terms under which re-employment is possible are left open at the start.
Similarly, a company may hire temps or contract employees repeatedly from the same personnel agency, in which case one could think of the company as having developed an open-ended enduring relationship with the labor contractor in lieu of an enduring relationship with the workers per se.
Moreover, not withstanding these recent trends toward more flexible forms of labor contracting, we think that the most prevalent and interesting employment relations remain open-ended in just the sense we've described.
(2) The way in which this open-ended transaction is filled in - the determination of the precise terms of trade, as time passes and contingencies arise-depends on decision-making rights and privileges that are specified by law, by explicit contractual agreement, and (often most importantly) by tradition and common practice.
For instance, in most societies today, employees always retain the right to quit - slavery is illegal - although employees can sometimes voluntarily surrender rights to what they can do after they quit, in so-called non-compete agreements.
On the other side, employers' rights to terminate an employment relationship are often circumscribed under law - in legal jargon, employment is not at will - and employees in certain cases can be fired only for just cause, following due-process procedures.
Except for the occasional professional athlete who claims she would pay to play the game, or the starving artist driven by his muse to create without tangible reward, people work in substantial measure for the economic rewards they earn.
Even more so, most employers hire their employees primarily for economic reasons.
This is not to say that wages (or other economic benefits) are the be-all-and-end-all of employment from either the employee's or employer's perspective; personal and social fulfillment play important parts.
But it would be hard to deny that economic factors play a huge part.
The economic view of employment that we will adopt involves a sequence of ideas and observations.
We will provide an outline of the basic framework in this section.
When this is done-when the "big picture" is all laid out-we will elaborate and analyze the individual steps in the sequence.
(1) Employment is often an open-ended transaction, with the details of the transaction specified only as time passes and relevant contingencies arise.
This assertion probably doesn't come as a surprise to you.
The idea is simply that when the employees takes a job, the duties entailed a month or six months or three years ahead are not precisely specified.
Moreover, details about salary a year or two or five years hence, future promotion prospects, and the like are left vague.
This isn't to say that these so-called "terms of trade" aren't vaguely anticipated.
Each side has at least a rough idea about what will be involved.
But the details-some of which are quite important to the value of the transaction to two sides-ares left to be determined later.
Why? The simple answer is that many employment relations are enduring, or at least hold the possibility that they will be enduring, and the parties involved either can't anticipate all the possible future contingencies or don't want to waste time and energy at the outset detailing how each contingency, however unlikely, will be met.
The aphorism we'll cross that bridge when we come to it captures what is going on, where some of the bridges to be crossed aren't even foreseen at the outset.
In recent years, firms have increasingly opted for temporary workers, workers hired on a single-project basis, and the like.
To the extent that this is true, employment relations are increasingly less open-ended.
But note well: If someone hired by a firm to work on a project has reasonable prospects of being hired on future projects, then the overall "employment relationship" between the two is open-ended, in the sense that the terms under which re-employment is possible are left open at the start.
Similarly, a company may hire temps or contract employees repeatedly from the same personnel agency, in which case one could think of the company as having developed an open-ended enduring relationship with the labor contractor in lieu of an enduring relationship with the workers per se.
Moreover, not withstanding these recent trends toward more flexible forms of labor contracting, we think that the most prevalent and interesting employment relations remain open-ended in just the sense we've described.
(2) The way in which this open-ended transaction is filled in - the determination of the precise terms of trade, as time passes and contingencies arise-depends on decision-making rights and privileges that are specified by law, by explicit contractual agreement, and (often most importantly) by tradition and common practice.
For instance, in most societies today, employees always retain the right to quit - slavery is illegal - although employees can sometimes voluntarily surrender rights to what they can do after they quit, in so-called non-compete agreements.
On the other side, employers' rights to terminate an employment relationship are often circumscribed under law - in legal jargon, employment is not at will - and employees in certain cases can be fired only for just cause, following due-process procedures.
